Your Escrow Account – How Do You Track it?

Learn about your care plan escrow account and about how to legally administer the account. Can you spend it? Should it be kept separate? How do you track it for every patient with a care plan? What’s your total? This account is the money that your patients have paid in advance for their care and you’re supposed to hold it until the appropriate time to pay for their treatments.

See how easy it is to track your account by date range and then see a total with a few clicks in our software. See it and learn more by watching this free webinar on this page right now.

Jason: Well, welcome, everyone. My name’s Jason Barnes, and I’m the Chief Operations Officer here, and I just love talking to people who are looking to solve problems. And today, we received a request from a fairly number of our clients to learn how to better track and understand a single topic, which I’ll introduce here in just one second. But with me is Jessica Pancoast, who is the head of our Training and Help Desk teams, so we’re gonna be co-presenting this particular one today. To start off with, we’ll define the feature/the problem that we’re trying to solve.

When a patient walks into an office and agrees to a particular care plan, there are three ways of handling this particular incident, right? They can make payments as they go, co-payments, whether or not they’ve got insurance or if they agree to an all-cash plan, they can do that. It’s not a problem. Jess, I would say we’ve got lots of practices operating successfully in this particular model, right?

Jessica: Yes.

Jason: Not an issue. But then the next two can help us run into a problem or two as patients prepay or have recurring payments for their treatment plans. There are three scenarios doctors can find themselves in. Now, one, they can be in a state that doesn’t even allow this as I’ve listed here as our second item. Some states require separate accounts, but any way you look at it, regardless of whether or not you can or can’t take prepayments, if you have one, you have to track it. And I’ll start with, you know, I will quote, I didn’t write this quote down, one of our doctors who said, “If I was to die tomorrow,” Jess, correct me if I’m wrong, “If I was to die tomorrow, I need to know how much I owe my patients.” And so, that is the correct quote?

Jessica: Yes, or rather, this is how much the staff needs to give the patients back as he’d be dead. So…

Jason: Excellent clarification. So today we’re talking about escrow accounts. Escrow accounts represent the money that a patient has paid for their services that an office has not earned yet. So today we’re gonna to talk about not only why you should do it for good accounting practices, but some of you might have real legal motivation to actually do this. I know in the State of New Jersey, prepaying for, let’s just say, any type of service can be illegal. So, you have to really watch what you’re doing. But in most areas, there are lots and lots and lots of patients who prepay or set up recurring payments to pay for their care with the doctor’s office.

So today, we’re gonna talk about how to solve that problem and what is that we can do to help you keep track of it so that you can do a few things. And to cut to the chase, if you’ve got a bank account that’s separate, you’ll have to keep X number of dollars in that account. If you don’t have a separate bank account, for balancing reasons, you need to make sure you keep at least a certain amount in that bank account cover the credits. I’m not a tax expert. I’m not a compliance expert. You can always contact one, but they will share some information that you do need to keep certain number of dollars in your accounts to cover the credits that you need to for patients that you have not yet rendered services for but have money on the books.

So today, we’re actually gonna get into some of that information. So, I will get over here. This is our demonstration account. There’s not much information to show right here, but we’ve got a number of reports that will help people actually look information like this up. So, in our reporting menu or drop-down that anyone would have access to, we’ve got “Practice” and we have a “Care Plans” drop-down that will allow you to access to a whole bunch of other things. In this particular case, there are lots of different ways to keep track of the finances for any individual, patient, or group of patients.

Our best practice recommendation is that every single patient will have a care plan if you plan on seeing them more than once. You can look up balances, you can see what the expectations are, which will help you forecast what your revenue for the following month would look like, so it’s a great tool. But for this one, this Care Plan Escrow Report, this is the one that we utilize to help you as a practice figure out how much cash you need to have on hand should a patient do one of three things. Patient decides not to have any additional care, even though they’ve prepaid, you’ll have to have a policy on refunding dollars, most of the time you have to give it back.

If a patient, you know, discontinues care, you’ll have to have a policy if they don’t contact you. You have $400 of their money, how are you going to know how long you can keep this money, whether or not you have to send it to them in a check? You’ll have to check with a compliance expert on that. Here, we’re gonna show you how to track those dollars. So, I have ran this for a practice for two different time frames.

So in this particular time frame, we have, and I will make this a little bit larger for everyone to be able to see, two date ranges. January 2nd through today, February 3rd, looking at only our active clients. When I total this, and I’m gonna make this real big so that we can see it, it says that I have on my books $21,629.90 of patient money that I need to keep in my bank account to make sure that there is absolutely no way I’ve earned this money, and if somebody comes looking for it I have to be able to give that money back.

Prepayments are excellent for a number of reasons. Number one, obviously, it commits the patient to care and allows you to provide a discount, but it usually ensures that they’ll keep coming back for a long, long time. If I look at my “Inactive” and we were to run this, you can then see if there are any patients that have been discharged that you owe money to. And, obviously, if you look at “All” you’ll be able to see all of the patients that will need to get some type of money back. And this is really where it comes down to you as an office to have those policies in place for what happens if a patient either chooses to discharge themselves by not showing up anymore or if they actually voluntarily tell you that they’re not gonna come back for care.

But, notice I’ll run this for the same exact practice for a much larger time frame, October 1st through February 3rd. We’re talking about $55,000. This is a representative of a fairly large practice. This particular practice has a policy that’s twofold. For their cash patients they’re actually going take money upfront, but they’re also out of network with a lot of insurance companies. One of the best practices that they have adopted is to take money for their Blue Cross Blue Shield out of patients upfront. This is a recommendation I have for anyone and everyone who will see a payer that will send payments directly to a patient.

Not necessarily an easy sell, but in this case, they kept getting burned by the fact that patients would get the money, they’ve got through a portion of their care, they don’t complete their care and they keep coming back in, and you don’t have a way of keeping track whether or not the patient owes you money. But if they’ve prepaid, they’ll be sure to either keep the money that’s sent or settle up with you to make sure that they only paid for their care that was necessary. Obviously discounts come into question here. Without this type of report, though, there’s really only one other place that you can look in the system, and I won’t open it up right now but I’ll show you how to actually find that, is you’re able to go find “Patients With Credits Due.” Those credits just can come from a lot of different places. I’m sorry?

Jessica: I think “Accounts With Credits Due” is “Claims With Credits.” You wanna actually go up the “Account Balances.”

Jason: Well, I actually wanted to make the distinction between the two, which you’re doing a great job of. You know, “Accounts With Credits Due” could have people thinking, “All right, I can just use this for a particular report.” If a claim comes back and has a smaller patient responsibility on it than was originally anticipated by the doctor or collected, this will show under “Accounts With Credits Due,” correct, Jess?

Jessica: Right, yes. If there was patient money that was applied and then insurance reprocessed, for example, any time a claim that ends up with more money on it than was actually due, that claim will show up under this report.

Jason: And then “Account Balances.” “Account Balances,” and I will click on this particular one, brings up a report, and I will make this a little bit smaller, and you can choose to utilize this report for, you know, credits, balances, or both. I’ll click just “Credits” here, and we’ll generate a report. And I’ll make it a little bit smaller so you’re able to see what the entire report looks like. It’ll bring up all of the patient accounts that money is owed. But what’s the difference, Jess, between our Care Plan Escrow Report and our Account Balance report?

Jessica: The Care Plan Escrow Report is only going to show you patients who actually have a care plan set up on their CP tab in their account. This report where you can run it by credit on the patient account, it is showing all patients, whether or not they have a care plan, active or inactive. It is simply looking at the balance on the account, is it a credit or is it a balance, and it will appear in the list depending on which one it is.

Jason: Perfect, thanks. So, at this point, a patient walks into the office, they sign up for a care plan, and they prepay their entire, let’s just call it in this particular case, $3,800 dollar balance. They’re prepaying for all of their point-of-sale items, they’re prepaying for all of their office visits, X-rays, every single bit of care. And you offer them quite the discount. This $3,759 could be representative of, “Hey, you pulled out your first visit and this is the balance that’s left over.” If you put them on a care plan, Jess, what are the benefits of tracking this on a care plan rather than here?

Jessica: Well, tracking it on a care plan, you can…having that care plan it commits them to coming in and seeing you. If they pay upfront, it’s just, “Here’s your money, we’re applying for 20 visits,” whatever. They’ve got no documentation kind of reinforcing how many visits they should be seeing to get their care. And, really, it allows for better tracking of where that money is supposed to be used, on the Care Plan Escrow Report, because it also shows you how many visits they’ve had, how many are left in that care plan, and that type of detail so you can really track that patient’s care.

Jason: Awesome. I’ll add just one thing to that answer, Jess, is on a care plan, the amount that you charge per visit and the amount that you actually collect per visit and that difference is automatically tracked and automatically done for the office. So, the right amount will be credited to that individual visit. It’s a great way to add standardization and consistency to the amount of money that’s gonna be applied from that, you know, sometimes very large credit on the account to the care plan. If you choose to track it this way and you don’t have a patient on a care plan, it is simply going to apply any claim that hits patient responsibility to the balance.

And so you can really rein in your control if you choose to do this all through care plans. And that’s my recommendation to any office who wants to actually track these numbers. You have to be able to do it through a care plan if you want the best results. Otherwise, it can become a real manual accounting. Jess, is this overstating it to call it a nightmare if you choose to do it without a care plan?

It can be that way, especially if you have a lot of patients prepaying and then all you’re seeing is these credits on their account and you’re not sure why. With the care plan tracking, there’s that additional information, “Oh, they’re supposed to be being seen for 36 visits.” We have the notes in the care plan tab that allow you to enter in additional information such that they prepaid or, you know, maybe if they…recurring payment that they’re making every month, that type of information.

Jason: Okay. And to wrap up this topic, I’m gonna give you a little bit more information on the actual Care Plan Escrow Report as opposed to the whys. It will give the total number of visits, the total number of cash visits, insurance visits, and care plan amounts that are to date in that care plan. So, when you look at the “Total Patient Payments Due,” this particular line item, of 618, the patient payments during that care plan, you can see that they should have paid 618, the patient payments during the care plan has just been 103, and the amount in escrow is 2575. So this particular amount here is negative.

So, this allows you to really understand what’s happening on each line item as opposed to at the bottom here where you can say, “All right, how much money do I have to have active and available in my account should I have to give all of this money back?” So, our recommendation, if you’re on a monthly health check and you have additional questions on this, ask the questions. Make sure that you’re staying compliant. If you don’t know if you’re in a state that requires a separate escrow account, I found that there is no single website that will get you that information for all 50 states.

But I know, for instance, California is a state where you have to have a separate escrow account for money that you haven’t earned yet, and you have to keep the money there and then you can “pay yourself” when the services are rendered and settled up on a regular basis. So it’s been real-time if that’s something that you have the time to do. So, in this particular case, we’re looking at a fairly large amount. You can run this report for your entire tenure of using our particular system and it will give you all of the information for, let’s just say, active patients.

You are still going to need, and I’ll recap one more time, policies in place to make sure that you stay compliant. The policies have to include if somebody discharges themselves, how do I handle getting their money back to them? What is considered a good faith effort? If somebody walks in and says they are going to discontinue care, you’ll have to stay compliant. You’ll have your written down policy of how you’re going to handle that so that you’re consistent from one patient to the next. And, I will open this up. Jess, do you have anything to add before we open it up for anybody who has any questions?

Jessica: The only thing I have to add is the fact that this report does run off of the start and end date of a care plan. So you do want to actually use these skills and put realistic dates in there, otherwise you’re going to have to run this report until the end of time in order to find those patients that you put in the end date of 1/1/9999.

Jason: That’s a good distinction. So, we’ll open this up. If anyone has any questions, feel free to type them in and we’ll tackle them in a couple of minutes. And if there are no questions about anything else on this particular topic, we’ll open it up to anything else.

Jessica: And for anyone who does not see the chat list, there will be a button up at the top left of your screen that says “Show Chat” if it’s not already open for you.

Jason: I see a lot less total prepayments, you know, recently in the system for our practices and a lot more people getting on recurring transactions, which, to me, isn’t surprising. But the one thing I have noticed is how many providers have actually started taking out of network Blue Cross Blue Shield upfront from patients. That we see happening regularly now, which I’m super happy about because I saw a lot of providers missing out on their Blue Cross Blue Shield payments because the patients never collected.

Jessica: Right. I’ve heard of a couple instances where the patient paid their co-pay upfront, but then they got paid by insurance and it was difficult to get that money from them.

Jason: So, again, we’ll open this up to any other questions that you might have and we’ll do our best to answer them and make sure that if we can’t answer them, we at least have a follow-up in place. The care plans, in general, though, with the balances…with those that do prepay, Jess, a lot of them have resigns [SP], right, where the entire amount wasn’t used because X number of visits were missed. And, this allows them pretty easily to look at, and then when somebody resigns, right, and they can say, “All right, we’ll apply this money that’s already sitting there to your next care plan and we’ll keep you coming, whether or not it’s a wellness plan or, you know, continued acute care.”

I know that this report has been run a lot for preparing for resigns and helping doctors understand which patients, you know, still have money so that they can, you know, have a little bit more information. Because when you’re actually speaking to the patients you actually…you have to physically remember to go look at the account, and this is just a good way of preparing for upcoming resign visits for those patients that need it. All right, if there are no other questions then we will end today’s webinar. Jessica, I’m not missing any, am I?

Jessica: Nope, no questions have been written in.

Jason: All right, well, it’s 2:27 so we’ll hang out for a couple more minutes then, and if there are no questions, then we’ll end.

Jessica: All right, sounds good.

Jason: Well, Jessica, there are no other questions, so thank you and we will end here for today.

Jessica: All right, no questions, so thanks for coming, everyone, and we’ll see you next time.

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